The Bullish Consensus is the degree of bullish sentiment for a particular market, such as Gold. For example: a Bullish Consensus of 65% for Gold implies that 65% of the traders are bullish and expect the price of Gold to rise. Conversely, 35% of the traders are bearish and expect the prices to decline. The Bullish Consensus is sometimes referred to as market sentiment. The Bullish Consensus originated in 1964 and was the first used for taking Contrary Opinion positions in the commodity markets. As a result of the consistent accuracy in evaluating Contrary Opinion situation, the Bullish Consensus became the yardstick of the industry. A Contrary Opinion situation exists when a market runs out of new buyers in an over-bought situation or runs out of new sellers in an over-sold situation. The Contrary Opinion levels are generally the highest and lowest Bullish Consensus readings of each market for the past year or so. The Bullish Consensus is well known for being able to pinpoint market tops and bottoms.
The Bullish Consensus is compiled through advice collected by reading current copies of the market advisers' market letter, calling hotlines provided by advisors, and contacting major brokerage houses to learn what the house analyst is recommending for the different markets.
The Bullish Consensus can be used for trend following and for Contrary Opinion situations. It is a measure of sentiment towards a given market and will generally increase with rising prices and decline with falling prices. When the Bullish Consensus reaches an extreme over-bought or over-sold level prices usually correct or reverse direction.
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